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E-book
Author Airaudo, Marco, author.

Title Inflation targeting and exchange rate management in less developed countries / prepared by Marco Airaudo, Edward F. Buffie, and Luis-Felipe Zanna
Published [Washington, D.C.] : International Monetary Fund, 2016
©2016

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Description 1 online resource (65 pages) : illustrations
Series IMF Working Paper, 1018-5941 ; WP/16/55
IMF working paper ; WP/16/55.
Summary We analyze coordination of monetary and exchange rate policy in a two-sector model of a small open economy featuring imperfect substitution between domestic and foreign financial assets. Our central finding is that management of the exchange rate greatly enhances the efficacy of inflation targeting. In a flexible exchange rate system, inflation targeting incurs a high risk of indeterminacy where macroeconomic fluctuations can be driven by self-fulfilling expectations. Moreover, small inflation shocks may escalate into much larger increases in inflation ex post. Both problems disappear when the central bank leans heavily against the wind in a managed float.--Abstract
Notes "Research Department, Strategy, Policy, and Review Department, and Institute for Capacity Development."
"March 2016."
Bibliography Includes bibliographical references (pages 57-64)
Notes Online resource; title from pdf title page (IMF.org Web site, viewed March 14, 2016)
Subject Monetary policy -- Developing countries -- Econometric models
Foreign exchange rates -- Developing countries -- Econometric models
Inflation targeting -- Developing countries -- Econometric models
Foreign exchange rates -- Econometric models
Monetary policy -- Econometric models
Developing countries
Form Electronic book
Author Buffie, Edward F., author.
Zanna, Luis-Felipe, (IMFstaff)
International Monetary Fund. Research Department, issuing body.
International Monetary Fund. Strategy, Policy, and Review Department, issuing body.
International Monetary Fund. Institute for Capacity Development, issuing body.
ISBN 1513567438
9781513567433
ISSN 1018-5941